Jaguar considers axing its best-selling car

Jaguar may cut its best-selling model as the British brand plots a survival strategy modeled more on Porsche than BMW. By JEZ SPINKS.

May 7 2007

Jez Spinks

Jaguar may axe its best-selling model, the X-Type, as it plans a future based on lower volume and higher profit.

The British sports-luxury brand has been a loss-maker in recent years, and is currently restructuring amid rumours that Jaguar could follow Aston Martin’s recent exit from the Ford empire.

The X-Type was introduced in 2001 to take on the BMW 3-Series and double Jaguar’s sales to more than 170,000 a year.

The conservative, old-school styling, however, did not appeal to the X-Type’s younger target audience, and Jaguar hasn’t exceeded 100,000 sales since its debut year.

Quality issues and links to the last-generation Ford Mondeo (it shares the same front-drive platform) haven’t helped, either, as sales have continued to decline.

David Blackhall, Jaguar Australia’s managing director, says the X-Type succeeded in attracting new customers to the brand but that a replacement for the ageing model is not guaranteed.

“The plan in relation to the X-Type is not resolved,” says Blackhall. “There are a number of studies underway in the UK, and a number of alternatives are being considered – including doing nothing at all.”

That would be a big blow to Jaguar in Australia because the X-Type accounts for about 60 per cent of Jaguar’s local sales, which totalled 1,071 in 2006.

Of the mainstream brands present locally, Jaguar sold only more cars than Dodge, Fiat, and Smart last year.

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Blackhall says he’s not concerned if the X-Type is not replaced – despite sales of the ageing model falling 22 per cent year on year.

“We think XF will be the volume seller going forward rather than the X-Type."

The XF, previewed at January’s Detroit motor show as the CX-F concept car, has been labelled by the automotive industry as a do-or-die car for Jaguar. Blackhall agrees.

“It has to be a success,” he says. “[The XF] has to be a home run. This is Jaguar’s money-shot for the next five years.

“It’s no secret that the S-Type is probably the most difficult car we have selling to a broad consumer audience.

“It wrote the book on retro. It’s a very competent car, a very Jaguar car, but as a broad-based assault on the $100,000 luxury-car price bracket it’s a tough one because the styling is very polarising.”

Jaguar as a brand is not targeting BMW and Mercedes specifically, says Blackhall, but the XF needs to attract some of their buyers.

“Clearly those customers who are buying the [BMW] 5-Series and [Mercedes] E-Class are the sort of people we are looking for.”

He says the front and rear ends will be similar to the final car that debuts at September’s Frankfurt show before being previewed locally in October ahead of an Australian launch about April/May 2008.

The headlights will be wider than the concept’s, though, and the roofline, especially towards the rear, will increase in height by another couple of inches to create better access to the rear seat as well as better headroom.

“Without talking too much about our future product plans, there are a lot of variations on this [XF] theme,” says Blackhall, hinting at variants beyond a four-door. “There’s also a much more robust engine strategy with [the XF] than in the past.

“We see this car multiplying itself in a way that the previous S-Type was unable to, and therefore accessing different niches in the market and adding to our volume base, which we see substituting somewhat for the X-Type. I’m not saying the two cars appeal to the same customer, but perhaps as we de-emphasise X-Type a bit, [XF] fills the gap to some degree.”

The smallest engine to power the S-Type is a 2.7-litre V6 diesel, but Blackhall wouldn’t rule out the possibility of the XF range starting with a four-cylinder model. He added that hybrids and the V8 turbo diesel (TDV8) recently launched in vehicles from fellow Premier Automotive Group stablemate Land Rover could be in the pipeline for XF.

Until the XF arrives, Jaguar Australia is putting most of its eggs in the basket of its range-topping sports car – the XK – as it contemplates a new business direction that no longer pins wild hopes on catching Germany’s premium car-making elite.

“Our major focus [at the moment] is on XK because it’s a great [profit] margin car,” says Blackhall. “It’s really where we’re placing our bets. We’ve got a lot less focus on what the absolute volume number is each month.

“We think we can be profitable on lower volume levels, better margins, and a tighter focus on what’ we’re doing. And that’s really the strategy worldwide.”

Such a strategy seems synonymous with Porsche, the world’s most profitable car maker.

“[Porsche] is the model that’s most often referred to, although we wouldn’t presume to say we’re going to have the sort of product line-up Porsche has got now [with] ambitions to expand.

“But definitely [we’re aiming to be] much smaller, making sure the cars we build truly deliver on the Jaguar brand promise, which is beautiful fast cars.”

Porsche solidified its standing and profits with the Cayenne, but Blackhall isn’t convinced a sports-luxury 4WD would work for Jaguar, even without the consideration of its sister company and 4WD specialist Land Rover.

“I personally think [a Jaguar 4WD] would have to be so totally different to anything else to be successful. The thing about Porsche is that they sat down and said, ‘How do we invent an SUV that’s so unique we can carve out volumes that will make this work and leverage the Porsche badge?’ And I thought they did a pretty good job.

“I don’t see us doing a me-too. I don’t think there’s space there for us [in the luxury-4WD segment]."